Passive income can be useful for anyone, but for those with chronic illness it could be all the more useful. If you lose your job, can’t work like you used to, or perhaps are looking to retire, passive income could be one way to make your time, energy & money go a little further. This collaborative post isn’t going to apply to everyone, but it’s worth learning about how it works and whether there are any avenues you could explore in future for some extra pennies.
Passive income has been increasingly talked about in recent years. It’s something that advice articles often encourage you to earn, but what exactly does it mean and how can you earn a passive income?
Thankfully, it’s a relatively concept easy to understand, but developing this sort of income is not as easy and it won’t be an option or of interest for everyone. However, there are people who may be able to eek out a passive income without realising it.
What Is Passive Income?
Simply put, active income is money you make when actively working for it. When you go to work every day or do set tasks while working self-employed from home, you’re actively earning an income. By contrast, passive income is where you generate money without needing to do something continually on an ongoing basis. Money is earned as you can do other things, therefore, you are essentially earning income passively.
Having said that, this doesn’t mean you don’t put in work at some point. Most methods of generating such income require some setting up beforehand, whether that’s looking for savings accounts, investment opportunities or writing an eBook.
In most instances, passive income is likely to be subject to income tax. Ensure you know the rules around tax so that you can declare it as required, including if you’re in receipt of benefits.
How Can You Earn Passive Income?
There are various options when generating passive income, some of which are simpler than others. Investments are perhaps the most obvious, being something that involves the least amount of effort once the money is invested.
Essentially, you can invest in things like the stock market, bonds or Forex. The idea is that you invest in different assets, then they appreciate in value of time. Eventually, you can sell them for a bigger profit and you have earned money without doing anything other than setting up the investments. With websites making investments and navigating the stock market a little easier, more people seek to learn the ins and outs of it online and invest shares on their own steam. Some people can do very well with this sort of passive income, and the starting cash required can be quite low in some cases. Caution should be applied, however, because there are no guarantees in investments and you should carefully consider your options and know what you’re doing before risking your cash.
A similar approach can be found in property investments, but this time you’re investing in property to earn passive income by renting it out. Again, you’re basically earning money in your sleep as renters pay you every month. If you had the money to do so, you could increase from one to two or three rental properties to boost the income stream. Alternatively, some people buy a property requiring work cheaply, renovate it and sell it at a profit. Of course these routes require a heavy lump of money initially to see the returns, so unfortunately not as many people will have this as an option.
If you have some savings then a decent ISA could generate interest on what you already have, and even some savings accounts pay a small amount of interest. If you don’t want your money tied down or the risk of penalties should you need to take money out, then instant access options are perhaps more suitable. The better rates are usually with those where you leave your money for a set period of time. It always pays to shop around to see what’ll work best for your money and your situation.
Business & Royalties
Other ideas include starting a business, then taking a step back and letting others run it for you. Or, if you’re a creative individual, you can earn money from royalties. This is when you have licensed products that people have to pay to use – such as music, digital art or photos.
Affiliate marketing could be considered passive income. This is where you sign up to an affiliate program, either one that incorporates lots of brands or directly with the brand you want to link to, then leave specially-created links on a website or social media. These links then generate a small percentage of affiliate earnings when someone buys via them.
Book / eBook Sales
Writing and publishing a book is something that could dribble in income over time, too. It’s active work while you write it of course, but if people buy it for the months and even years thereafter then you could have a nice surprise with the passive income that accrues over time. More people are turning to the likes of free e-publishing, such as with Kindle books. You can write about anything you wish, whether it’s fiction, non-fiction, a how-to guide, poetry, self-help tips, a memoir and so on.
What Are The Benefits Of Earning Passive Income?
For those currently employed, passive income can be a side-earner for extra pennies while still working a full or part time job. For those who are unable to work for whatever reason, for those with chronic illness who perhaps can’t work like they used to, or for those in retirement, passive income is an avenue that requires a little less time and energy to make your money go further.
The knock-on benefit is that increasing your income can help reduce the pressure of money worries and the stress that comes with it.
The dream for many might be to earn enough passive income that you don’t have to worry about money again and can go without your day job. That’s not realistic for most people, but it can happen in some rare cases. If nothing else, it’s a little extra money to put aside or pay off bills and debts, helping your overall wellbeing and financial health in the long run.